market ace

How Banks Fail at Foreclosure Auctions

We had the opposite experience 2 years ago truing to buy a property from Countrywide.. We made a lowball offer (all cash) and they countered wanting full appraisal, which turned out to be only $2,000 more than our offer so we agreed. Upon inspection there were minor things wrong with the property such as the garbage disposal did not work etc. At most a couple of thousand to fix them all.

We said that as long as they wanted full appraisal we wanted all itmes fixed as we did not want the hassle of fixing them. They refused so we walked. The property is still sitting vacant two years later, all of the landscaping is dead, real estate taxes have accumulated and who lnows how much additional work is needed to restore the property to a livable condition.

They now have the property listed for 25% less than we offered and still no takers. The insanity of lenders is amazing..

The Arguments for Big Banks

How could we break up the big banks (that are not really even banks) , who would be left to run the US gov't?

How Regulated Does Wall Street Need to Be?

There is no limit to how regulated Wall Street should become.

Their ridiculous practices of risk taking, unbridled greed and market maipulation resulting in billions of unwarranted profits and bonuses needs to be stopped.

The first step is to strip the banking business out of investment houses. This was just a ploy to get TARP money and calling these entities banks or allowing them to be banks is a blight on the real banking industry and cripples lending.

Derivatives need to be severly regulated and disclosed as they are ticking time bombs that can easily bring down the whole economy. Along with this change maybe throwing in some honest accounting and disclosure rules would also help.

They also need to stop Wall Street from running the US Gov't. This obviously will not be easy, but when Geithner talks to Wall Street CEO's more than the president or congress it points out a clear problem.

Of course the most obviously needed reform is to audit the FED and put huge controls on them or better yet abolish them.

Too bad none of this will ever happen

The Coming Consequences of Banking Fraud

Anyone that does not see the truth in this article has their head way up a place it does not belong. This describes modern "markets" to a tee. Anyone that wants to play in this game better have deep pockets and love losing money in the end.

Interestingly after blasting my brokerage firm about the sham of the current US stock markets and my unwillingness to play except for stragic buys with close stops, they actually responded stating that they had advisors I could contact to help with planning to "unwind" from the US markets. This seems like very valuable advice.

Citi's Profitable Too, Quelle Surprise

CEO - "How much is 2 + 2?"

CPA "Whatever you want it to be"

Why would anyone trust a bank's financial statement ever again?

Interesting report on Citi "rally" from the Financial Times of London that also helps explain a few things:

The Financial Times out of London claims ‘no real money’ was behind this stock rally of over 20%., instead huge short covering, enhanced by pressure tactics from Wall Street brokerages themselves drove the rally. A movement pervaded Lower Manhattan offices to formally call in all Citigroup shorted shares on loan. Whether legal or not, it helped cause a big bank stock rally.

Wall Street also played arbitrage games with preferred versus common shares, which harmed the public but enriched the insiders. Other Citi share games were played that enabled preferred shares to serve as collateral on common share shorts, as the plebeian shares descended to $1/share value.

The Working Group For Financial Markets put to work some of their ‘Black Bag’ money. Never lose sight of the fact that Plunge Protection Team funds came in large part from missing $1.5 billion in Fannie Mae funds from 1988 to 2000, specifically out of the HUD offices in Houston (Papa Bush regional home) and in Oklahoma City (Clinton home region), whose funds keep America stock market strong.

Then you have all the absurd giant steps backwards to permit big banks to ignore Mark-to-Market and just conjure up asset values from indefensible models, with blessing from Financial Accounting Standards Board and the USCongress.

Easing of Mark-to-Market Rules: Good for Banks, Bad for Investors

Congress isn't helping anyone except the fraudsters on Wall Street see coontary below from Marketwatch:

Accounting standards now determined by mob rule

"The only thing worse than bankers making up accounting rules is members of Congress making them up. Repeating its blunder from the 1994 battle over stock options, the staid Financial Accounting Standards Board has buckled to political pressure demanding that it change accounting rules. The FASB voted Thursday to ease the interpretation of rules requiring banks and other big institutions to value their assets on a reasonable basis". .

Small investors better beware of even more fiction in financial reporting to go along with a fictional currency.

Mark to Market: Time of Death 8:45AM, April 2, 2009

I guess if we can have a fictional system of currency, we should have accounting systems to match. Since no one trusts banks accounting now, crerating 20% better profits (less losses) out of thin air should really help. It only makes sense to take assets that have no market value and let the owners guess what the value would be if they could sell them for whatever they wanted. Now we can apparently even trust the banks to pay current debts and deposits with fictional money that may be derived sometime in the future, instead of the true current values of their assets today.

When will this gov't be stopped? They print money and pass it out like candy to Wall Street, hire and fire CEO's and set their compensation, tell autoo companies how to run their business and now they are writing accounting rules. They are making communist China look like free marketers.

After this fiasco any small investor still playing the stock market "game" or trusting banks with any substantial amounts of their money, bettert take a second look and run for cover, because the house of cards just got a little weaker.

Is Goldman Tempting the Interest Rate Black Swan with 1,056% Risk Exposure?

Since Dodd and Frank have still not even learned how to spell derivative, let alone have a clue about what they are and what they mean in the scheme of bringing down the world's financial systems, you think we may have something to worry about here?

Dodd thinks it is great that AIG is so smart that they can even swap interest rates and make money at it - well maybe it's taxpayer money that their earning doing it, but they still have plenty of money to contribute to his election campaign so where's the problem here? Besides he has those smart, unknown, guys in Treasury writing his legislation for him and surely they would not let Wall Street lose more billions and further cheat the taxpayers - would they?

Then there is the brilliant Frank who think interest rate swaps must be great because the Fed is always swapping one rate for another and anything Bernanke does must be good so why shouldn't the big banks do it? Gee and that Goldman bunch "accepting" those backhanded taxpayer bailouts through AIG, but poised again to make those high leveraged returns with our tax dollars is just what the world needs. They must still have that brilliant Paulson advising them on how to leverage their investments so nothing could possibly go wrong. Maybe he better call them and get some larger campaign contributions for blessing them and their great investing strategies.

With finacnial geniuses (well at least at lining their own pockets) like this leading congress, and the Obama Geithner team feeding trillions to their Wall Street masters, we should feel well protected and yet some people say we should be worried just because "great" firms like Goldman are primed to lose up to a 1000% of their capital. What are taxpayers for if not to cover these losses and save the banking industry so they can loan us the money to pay our increased taxes?

One Easy CDS Fix

Why is everyone only talking about CDS's when the derivative market in interest rate swaps dwarfs it about 10-1 and giant problems will arise here when interest rates rise.

Until the third quarter of last year, the banks' losses in derivatives were almost entirely confined to credit default swaps — bets on failing companies and sinking investments.

But credit default swaps are actually a much smaller sector, representing only 7.8 percent of the total derivatives market.

Now, with potential new losses in interest rate derivatives, this problem has the potential to cause a collapse in a whopping 82 percent of the derivatives market.

Thus, considering this far larger volume, any threat to interest rate derivatives could be far more serious than anything we've seen so far.

Today U.S. banks alone control $200.4 trillion in derivatives; and it's precisely in this dangerous sector of IRS's that the megabanks dominate the most.
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According to the Office of the Comptroller of Currency's Q4 2008 report, America's top five commercial banks control 96 percent of the industry's total derivatives, while the top 25 control 99.78 percent. In other words, for every $100 dollar of derivatives, the big banks have $99.78 ... while the rest of the nation's 7,000-plus banking institutions control a meager 22 cents!3 This is a massively dangerous concentration of risk.

The large banks are exposed to the danger that buyers will vanish, markets will suddenly become illiquid, and they'll be unable to unload their positions without accepting wipe-out losses. The large banks are exposed to the danger that, with exploding federal deficits and new fears of inflation, interest rates will suddenly surge, delivering a whole new round of even bigger losses in the months ahead.

Worst of all, the five biggest banks are exposed to breathtaking default risk — the danger that their trading partners could fail to make good on their gambling debts, transforming even the best winning trades into some of the worst losers.

Here's a chart on these risks, updated to reflect the new data just released on Friday for the year-end 2008,

Bank of America's total credit exposure to derivatives was 179 percent of its risk-based capital;

Citibank's was 278 percent;

JPMorgan Chase's, 382 percent

HSBC America's, 550 percent, and

Goldman Sachs' total credit exposure at year-end was 1,056 percent, or over ten times more than its capital.

Get ready for some big fireworks in the banking industry that even Bernanke's giant printing press cannot possibly handle and all of the proposed accounting changes cannot mask or cure this massive problem..

Are the Big Banks Gaming the Taxpayer?

Not to worry if the banks cannot figure out enough ways to screw the taxpayers and have congress bless it, then they can count on Geithner to come up with new ways and even avoid congress in the process.

At least in the S&L fiasco, the scams were mostly hidden from view, now they are gov't policy.

Bend over Mr. Taxpayer Citi and B of A have a surprise for you.

Congress: Shortsighted About Financials

When you talk about being short sighted and missing the point, you are the ultimate example. The real point is that these banks cried wolf and had Paulson play congress and the taxpayers for suckers .They were just trying to further line the pockets of their all too wealthy executives at the expense of the taxpayers. It is obvious these firms still care nothing about putting country first and are more concerned about their bonuses than anything else, so much so that they would repay money they tried so hard to steal from the taxpayers to protect them.

Since they also got unjustified free money from AIG at the expense of the taxpayers, why would they want to share any gains with the taxpayers on the preferred stock deal. Hopefully these worthless greed monsters do pay us back and expose the fact they never needed the bail out in the first place and were just bent on more greed and theft, but amazingly someone may finally called their bluff just by cutting off their outrageous bonuses.

Mark-to-Market Marches Towards Extinction

It's time to stop playing with the accounting. Either banks are solvent or they are not. Accounting is a measurement in time and so for the most part not designed to predict the future, although estimates are necessary at times.

If we are to measure the finacial condition of a bank on a given day (the balance sheet date) then M2M makes perfrct sense. The only value the bank has available to pay its current liabilities (or depositor withdrawals) is the value that can be recognized from disposition of its assets at that time - not what they might be worth in the future.

It may be too bad that there is no market for their toxic assets, but that is the way markets work and consequently they have no, or very little, immeditae value.

I would love to get a bank loan based on the value I expect my home or stocks to be worth in twenty years, because I am going to hold them that long even though I have no cash flow available today to make loan payments.

Speculation Runs High Over New Dow Jones Candidates

Oh Boy let's replace GM with Google. That should finally make the DOW go back up. Obvioulsy some stocks need to be replaced, but it sure makes comparisons impossible and appears like it is just more manipulation in the end.

Confidence in Banks and Government While Fools Reign Supreme

Linking "confidence in banks and gov't" with "fools" in your title is very descriptive and correct. You can contimue to delude yourself with the future value of these worthless banks that are being propped up by a gov't that is also broke and in need of a bailout. Admittedly bank stock prices are more like buying options now, but in case you forgot options often go to zero rather than striking huge profits.

Citi, Bowing to Pressure, Doubles Down

Are we supposed to cheer for Citi for loaning out a PORTION of their TARP funds? Where did the other $9 billion difference go?(Bonuses probably) They raise their interest rates for CC holders unmercifully and the gov't bends over and delays regulations to stop this robbery until July of next year. Is that the gov't intereference you speak off? Citi is broke and should have been allowed to fail. All we get for our tax dollars is more money dumped down the Citi drain and we are still on the hook for $300 bbl of their bad loans. So now they announced they may loan some money to a few people - as if anyone is qualified for a loan or wants to borrow it any more. This is crazy! The gov't could have passed out the same $36 bbl in infrastructure spending tax credits or other stimulus and really helped the economy instead of screwing the taxpayers with this feeble attempt by the Treasury and Citi to circulate a few dollars. The actions of Wall Street banks has proven they deserve a 535 member board looking at their every move and at least pretending to protect our tax dollars.